Grunseth earned the Independent-Republican Party's gubernatorial nomination endorsement at its state convention, defeating moderate State AuditorArne Carlson. He defeated Carlson again in the September 11, 1990 primary to become the main opposition to two-term incumbent Governor Rudy Perpich.
Sex scandal
On October 14, 1990, public allegations of sexual misconduct were made against Grunseth. On July 4, 1981, Grunseth held a pool party at his home. It was alleged that his daughter entered the pool naked, and Grunseth joined her, also naked. When two of his daughter's friends, Elizabeth Mulay, 12, and Liane Nelson, 13, refused to swim naked, Grunseth attempted to tear off their swimsuits. Nine years later, Mulay and Nelson, now adults, levied accusations against Grunseth, which two other women, Lisa Hare and Heather Charles, corroborated. Grunseth denied the allegations, but they severely damaged his candidacy. Nine party attendees submitted affidavits stating that they had witnessed nude swimming. Two members of the rock band that had performed at the party that evening remembered seeing men and teen aged girls swimming naked. Carlson soon decided to reenter the gubernatorial race as a write-in candidate. The situation divided the Minnesota Independent- Republican Party. Some defended Grunseth and charged that the accusations were politically motivated, while others wanted Grunseth replaced with 1986 gubernatorial candidate Cal Ludeman. U.S. Republican Senator Rudy Boschwitz, who was waging his own campaign for reelection, led a moderate faction that wanted Grunseth replaced by Carlson. Boschwitz's stance alienated some of his supporters and was cited as a factor in his defeat. In reply, Grunseth claimed that he had engaged in adultery and other bad behavior in the past, but that he had changed since then and been faithful to his wife, the former Vicki Tigwell, since their 1984 marriage. A former mistress of Grunseth's, Tamara Jacobsen Taylor, 32, then came forward claiming that she had engaged in sexual relations with Grunseth during his professional visits to the nation's capital as recently as July 1989. Facing certain defeat, Grunseth withdrew from the race on October 28. Carlson, the runner-up in the primary, replaced him on the ballot and defeated Democrat Rudy Perpich.
Post-political career
After the election, Grunseth was fired by Ecolab. In 1993, he sued the Marriotthotel chain for $4 million, claiming that they divulged records to the Star Tribune, from the night he stayed at the hotel in July 1989, the night his mistress Taylor alleged was the last she had spent with Grunseth. The amount of the lawsuit was based on what Grunseth would have earned had he not been fired from Ecolab. The court ruled against him, saying the receipt did not contain "private facts", simply showing that he booked a room in the hotel rather than demonstrating whether he was having an affair. Grunseth now lives in Barnes Bay, Bruny Island, Tasmania, Australia, where he purchased property in 1997 and founded Lennonville Orchards, a large cherry-growing operation.
